Bill Hwang was in trouble.
On Thursday of last week, the firm managing the former hedge-fund trader’s wealth arranged a conference call with executives at some of the largest investment banks in the world. The urgent topic: mounting losses at Mr. Hwang’s family office, Archegos Capital Management, from a handful of large bets on major stocks.
Because the wagers had been made in part with so-called total-return swaps—investments made by banks on behalf of clients for a fee—they had obscured Mr. Hwang’s large exposure to several companies.
Archegos shocked its lenders when it told them the size of its portfolio and how little cash it was holding, said people familiar with the call—not the least because they were all now facing billions of dollars in potential losses themselves.
Now Wall Street is sifting through the aftermath of the biggest single-firm meltdown since the financial crisis. Mr. Hwang alone lost approximately $8 billion in 10 days, a person familiar with the matter said, in what traders and investors say was one of the fastest losses of such a large sum they had ever seen.